Work Opportunity Tax Credit

The Work Opportunity Tax Credit is a program created by the government to encourage companies to hire individuals who are participating in federally initiated programs. These individuals may need some type of assistance such as food stamps, monetary support for dependents, financial assistance for veterans, ex-offenders and offenders in certain stages of release. Individuals being hired could also be active in programs for vocational rehabilitation, youth programs, people who live in parts of the country ravaged by hurricanes and floods, people on social security, etc. The government wants to give these individuals a boost economically, and so is giving companies incentives to do so by providing tax credits of anywhere from $2400 up to $9000. This working tax credit could be a life saver to those desperate to find work where there is none, due to disasters or other misfortunes of life.

Perhaps a small to medium sized company decides to do business in an area of a city where crime is high and wages are low. This company would be eligible for a working tax credit of some sort. A company located in an area such as this is called an Empowerment or Enterprise Zone. Not only is a Work Opportunity Tax Credit available, but so are credits from state and local governments. Corporations who provide child care programs and services are eligible for up to a 50% credit for these types of expenses. Credits are available for companies to invest in areas ravaged by natural disasters like hurricanes, volcano eruptions, fires and floods in order to provide revitalization to the area. Businesses can take advantage of sales and use credits, gross receipt exemptions, low income financing and more.

Corporations taking advantage of a Work Opportunity Tax credit program utilize also what is termed as Point of Hire on-boarding. This refers to those hired from the programs discussed above. In order for companies to be eligible to take these credits for hiring these people, the new hires have to stay employed for a certain period of time, or the company does not receive credit. For example, if someone on a welfare program is hired, and work less than 119 hours that year, the business will receive no tax benefit as a result. The longer the person is hired, the higher percentage credit the company will receive, up to $9000 over a two-year time frame. Also, the new hire has to have participated in the welfare program for a certain number of months, usually about 15 months or more for the company to take advantage of hiring that person. God tells us not to criticize or mock poor people. "Whoso mocketh the poor reproacheth his Maker: and he that is glad at calamaties shall not be unpunished" (Proverbs 17:9 KJV).

The advantage to this Federal program for businesses is that there is no limit on the number of qualified individuals that can be hired! The working tax credit can save companies thousands of dollars. In addition, benefits can be claimed for more than one year for each individual hired from targeted groups. Financial managers within businesses would be advised to fully understand all the ins and outs of the WOTC programs in order to be able to take full advantage of all the tax incentives being offered. Why not save money? These benefits actually reduce the tax liability!

The Work Opportunity Tax Credit program was signed into law in an earlier format during the mid 1990's, and has recently been extended to August of 2011. A number of changes to the program have been made in order to make it more user friendly for both businesses and participating individuals. Some of these changes are that a former program called "Welfare to Work" was merged with the WOTC. The qualified veterans program has now included disabled veterans, making it much more comprehensive. Credits in the welfare to work program have been increased for first year participation to 40%, and the length of time to file the forms to begin participating in the WOTC program has been extended from 21 days to 28 days. Lastly, ex-offenders no longer have the burden of proving income requirements to become eligible. All of these changes only serve to allow more people to participate and benefit for a better community and work/life experience in economically depressed areas.

A program from the Federal government such as this is noteworthy, because it works to actually reduce the tax liability of companies, while providing the needed incentive to take social responsibility for the communities in which business is carried on. The relationships between corporations and individuals can now be seen in more of a positive light, since assistance comes through those companies participating. Both sides benefit and the economy of depressed areas is lifted to a higher level. The working tax credit is an opportunity that should be brought to the attention of all companies and those within who are responsible for handling the taxes and hiring within firms. Also, individuals within economically declining communities should be made aware of these programs so that change can occur not only within businesses, but also from without.

If a business is interested in taking advantage of these programs, then IRS Form 8850 should be filed, as well as Form 9061 from the Department of Labor. The information is readily available online at the touch of a button. Information can also be easily obtained at local job and family services organizations within any city. All one need do is to pick up the phone and inquire. Utilizing these programs can assist individuals on to a better way of life by lifting them out of poverty. Every company can be proud of having done that!

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